Distribution networks at the heart of the energy transition

[00:00:04.680] - Jon Slowe

Welcome to Talking New Energy, a podcast from LCP Delta. I'm Jon Slowe.

[00:00:09.340] - Sandra Trittin

And I'm Sandra Trittin. And together we are exploring how the energy transition is unfolding across Europe through conversations with guests from the leading edge of the transition.

[00:00:20.510] - Jon Slowe

Hello and welcome to this bitesized episode. The energy transition spotlight is going to increasingly fall upon distribution networks and it's going to do that because as electrification gathers pace and we get more and more solar and wind connected to distribution networks, more storage, distribution networks are going to be right in the middle of the energy transition. They are to some degrees already in certain countries with solar already congesting networks. But that is only going to accelerate and accelerate over the next years. So, today we're looking at highlights from an energy innovation conference in Great Britain that brought together network companies. GB is an interesting market compared to other European markets because the regulator, while everyone always complains and moans about regulators, has actually been really progressive in this area, allowing network companies to invest over a billion pounds over several years to tackle current challenges and prepare for the challenges ahead. So, a really progressive framework. And I'm joined here today by two LCP Delta colleagues to share some highlights and key takeaways from the event. Kat Blacklaws. Hello, Kat.

[00:01:38.120] - Kat Blacklaws

Hi, Jon.

[00:01:39.170] - Jon Slowe

And Tom Veli. Hi, Tom.

[00:01:41.440] - Tom

Hi, Jon.

[00:01:43.960] - Jon Slowe

So, let's do the traditional couple of takeaways each and see where that, see where that goes. Tom, do you want to go first with one of your, one of your takeaways?

[00:01:55.590] - Tom

Yeah, I think I came away very buoyant. I think I thought the Innovation Summit was... The people in the room are all determined to make a difference for the energy transition and for energy networks. And, it's always really inspiring and motivating for me to see so many people all aligned, trying to make a difference through innovation. And, I think the key takeaways for me there are a couple. It's obvious there's been a lot of innovation that's been done, a lot of technologies that have been tested. Now it's starting to move more towards the innovation to operation business-as-usual. So, I think there's a few steps along the way that will, that will help that hopefully with NESO (National Energy System Operator) being more established now and having a more holistic approach around this, I see the connexion of the electricity and the gas networks as well as big generation and the consumers being much more married up, which I'm hoping over the next 12-18 months we'll see that come into fruition.

[00:03:09.580] - Jon Slowe

So, there's a couple of things there, Tom. One is the challenge for any innovation, which is getting out of innovation and into business-as-usual in the network world. Do you think that's even harder because it by its very definition is a low-risk environment? So, have there been lots of successes or is it still largely a big challenge ahead in getting the learnings out of this billion pound innovation programme into actual operation?

[00:03:41.040] - Tom

Yeah, I think... I think what's apparent is the time and effort and the resource required to make some minor changes that could really make a difference for networks. So, there could be some standards within the organisations that just minor tweaks and they're not going to make significant difference to the networks in any way. But it can make a really big difference to a technology disruptor, for example, and it could really unlock some capacity on the network. So, whether that's around.

[00:04:17.620] - Jon Slowe

And that time, that's the innovation project might be done, but I guess it's a funding mechanism and the way that networks are so tightly regulated in many markets, it's getting that right balance between tightly regulating and managing network costs, and yet giving network companies a space to and headroom and resources to take that innovation into BAU. Innovation is not done when the innovation project's done. It's getting it into BAU.

[00:04:48.920] - Tom

Exactly. And it's integrating that into the wider market. And, I think understanding that the differences and trying to understand the conflicts and how they could harmonise that is I think what's going to happen next.

[00:05:01.930] - Jon Slowe

Yeah, let's come back to the whole system challenge that you alluded to in a sec. Kat, how about you? What stood out for you at the event?

[00:05:11.530] - Kat Blacklaws

Yeah, I think, I mean, I would completely agree on this point of business-as-usual. That was something I heard too. But I think a couple of other points that really came through when I was there. One point was, I think around the challenge of avoiding duplication in the projects. There's... There's so many projects going on simultaneously through both Strategic Innovation Funding (SIF) and the Network Innovation Allowance (NIR), which is fantastic to see and it's great for the sector, but I think there are challenges around the siloing of work and the kind of effort that's being done just to make sure that we're not duplicating work and we're really learning those lessons across projects so that we can all progress forward together and bring those lessons not just into business-as-usual, but also into best practise. So, that was definitely a sentiment I hear heard there. I think another challenge that was raised was around just really understanding the strategic direction and priorities of Ofgem. The challenges that are listed are quite broad and I think they are deliberately broad by Ofgem to encourage innovation from as many different sectors and places as possible.

[00:06:15.370] - Jon Slowe

Have you got an example or two of those challenges?

[00:06:17.790] - Kat Blacklaws

Yeah, sure. So we're currently in round four for SIF and the challenges.

[00:06:22.230] - Jon Slowe

SIF is one of the new innovation...

[00:06:25.050] - Kat Blacklaws

Innovation funding. Yes. And it goes in several rounds. So, the four they have at the moment are faster network development, greater heat flexibility, embedding, resilience and accelerating towards net zero energy networks. And, I'm sure anyone listening to those would agree that those are all really important areas for the networks, but they are very broad in terms of what could fall into those different categories. And I think again, it's this point around prioritisation around. Okay, so what are the priorities for Ofgem across those different areas and what's the overall strategic direction for how those could fit together into a broader plan? And I mean, I'm very much on the side that I would like a little bit more input from Ofgem. I heard other people at the conference saying they'd like to make it maybe even broader still so that there's definitely not consensus on that at the moment. And it is a challenge because finding that balance between breadth and specificity is difficult. But to me, I think it would be really helpful to see some direction from Ofgem so that when you're submitting your project and you're trying to move your innovation forward, you know exactly how you're going to be meeting what Ofgem is looking for.

[00:07:30.890] - Jon Slowe

And, it's that balance of top down direction and bottom up. Leave it to people to come forward with ideas. If you take that, just repeat the heat challenge.

[00:07:41.490] - Kat Blacklaws

So, the heat challenge is greater heat flexibility.

[00:07:44.490] - Jon Slowe

Yeah. Okay, so we definitely, as more we electrify heat, the more we're going to need flexibility from heat. But within that, you could look at a whole host of different aspects, couldn't you? But were there lots of projects, are there lots of projects around that challenge then? And I guess that's a risk, they're potentially overlapping. Or is that a future challenge where often we'd like to see more projects?

[00:08:08.520] - Kat Blacklaws

I mean, difficult to say. I think we're not yet at the deadline for this round of funding, so time will tell. But Tom, maybe you have some thoughts on that?

[00:08:15.840] - Tom

Yeah, I've actually made a note of three projects that really sort of really interested me. One was with a project with UK Power networks called Heat Tropolis. And this was actually quite interesting because it's around a District Heating network and much more integrated renewables and smart technology behind the metre as well. So, sort of marrying the three aspects almost forming a district heating microgrid with renewables and smart controls within the home. I thought that was really interesting.

[00:08:50.230] - Jon Slowe

I love the name Heat Tropolis. That's fantastic.

[00:08:52.610] - Tom

Yeah, I know. You can see why that was avoided just for the name and then sort of moving towards data predict for resilience, which is something I'm really interested in. And this is looking at, this is with Scottish Power and this is a huge thing in our industry where it's unlocking data, it's capturing data where possible, unlocking and actually making use of it. Predict for resilience is something really useful where they're capturing data, they're applying AI to predict when there's potential issues that might happen on the network and that is going to become more and more of an issue.

[00:09:29.570] - Jon Slowe

Okay. And then with those, with those issues you could then look at how you can solve them ahead of the need or short-term tools like flexibility to manage that issue.

[00:09:41.240] - Tom

Correct. Yeah, pre-fault measures. I suppose that's the goal of that. And then the final one for me was Electric Thames with UK Power Networks and I just think from a European perspective how the Thames is going to have electric vessels on it. I think it's such a big project for a huge part of Europe as well.

[00:09:58.500] - Jon Slowe

That's not electrifying the Thames but it's electrifying the transport on the Thames. We're about to run out of time. But Tom, Kat, I think that my overall takeaway is that it sounds like there's a huge amount of passion within the network industry in Great Britain to solve the current and upcoming challenges that we're going to see. And no shortage of innovation work but that normal innovation challenge of direction against bottom up and how to capture all the learnings from these projects and get them into network business as usual. So, hope listeners, you found that interesting to get a flavour of network innovation in the UK. Tom, Kat, thanks for your time.

[00:10:50.400] - Tom

Thank you Jon.

[00:10:51.510] - Kat Blacklaws

Good to talk to you Jon.

[00:10:53.480] - Jon Slowe

Thanks to everyone listening and look forward to welcoming you back to the next episode. Thanks and goodbye.

[00:10:59.480] - Sandra Trittin

Thanks for tuning in. We are excited to bring you captivating conversations from the leading edge of Europe's energy transitions. If you got suggestions for topics or guests for future episodes, please let us know.

[00:11:11.430] - Jon Slowe

And if you're enjoying the podcast then please do rate it and share it with colleagues. For show notes, transcripts and more, please visit lcpdelta.com.